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Thursday, April 10, 2014

American Centenarians

As a red-blooded economist, I have of course considered how long I am likely to live, with a suitable margin for error on either side, and then thought about best to arrange my lifetime patterns of earning and consuming income. Concerning life expectancy, my rule-of-thumb assumption has been that I won't live longer than 100 years. Partly this assumption is just round-number bias on my part. But it also meant that when I saw a just-released report by Brian Kincel of the U.S. Census Bureau on "The Centenarian Population: 2007–2011," my ears perked up.

Kincel notes that only about 55,000 Americans are over the age of 100--that is, 0.02% of the U.S. population. Census Bureau projections from 2012 suggest that the number of American centenarians will roughly double to 106,000 by 2020. By the time of my 100th birthday in 2060, the projections are for 690,000 centenarians, who at that point would be 0.16% of the U.S. population.

Of course, given my gender, my chances of living to 100 are lower. Women make up 57% of the Americans 65 years of age or older, and 81% of those 100 or older. Partly as a result, 23% of men who are 100 years or over are married, compared with only 3% of women centenarians. However, 65% of male centenarians and 85% of women centenarians are widowed.

For my financial planning purposes, it's distressing to note that 17.3% of those over 100 live in poverty, compared with 9.3% of those age 65 and older. As to sources of income, 83% of those over 100 receive Social Security, and they average $11,933 in annual income from the program. Only 24% of the centenarians get other retirement income, including survivor or disability pensions. For those receiving such income, it averages $13,408 per year. Only about 7% of centenarians receive Supplemental Security Income and 2% receive other cash public assistance income. Of course, these figures don't include in-kind public assistance in the form of Medicare or Medicaid (which pays for a lot of nursing home care).

The Census data also shows that about 1,600 centenarians are still earning income, and for this group, average earnings were $51,050. I can't figure out whether I want to be in this category when I grow up, or not.

I need to mull whether this information should cause me to alter my planning: perhaps I should plan my lifetime profiles of income and consumption based on the assumption that I don't live longer than 105 years?